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The Illusion Of Full Employment And Technology
Submitted by Lance Roberts of STA Wealth Management,
Recently, Tim Duy wrote an interesting piece entitled "Yes, I am Optimistic" wherein he stated that:
"The lesson no one wants to draw from this recovery is that the US economy is both stronger and more resilient than commonly believed.
Do not dismiss the real improvement in the economy since 2009. It is not unimportant that 2014 is likely to be the biggest year for private sector employment..."
Tim is correct, the current run in monthly employment gains is currently one of the longest in history. It has also been suggested by the Federal Reserve that as the economy approaches "full employment" it will need to consider hiking overnight lending rates.
This is truly great news for an economy that is now more than six years into an economic recovery following the "Great Recession of the 21st Century."
However, what is either missed, or just ignored, is the rather large group of individuals that have disappeared from the fabric of the economy and, while still alive, are simply ignored by current statistical measures. Let's do some math using data provided by the Bureau of Labor Statistics. [Note: I am only using the population between 16-54 years of age to eliminate the argument that "baby boomers are retiring" in droves, even though more individuals than ever, over the age of 65, remain employed.]
- Total Working Age Population (16-54 years of age): 248,657,000
- Total Nonfarm Employees (16-54 years of age): 114,523,000
- Percentage Of Working Age Americans Employed (Full or Part-Time): 46.05%
Just for comparative purposes here is the same calculation at the turn of the century (January 1st, 2000):
- Total Working Age Population (16-54 years of age): 211,410,000
- Total Nonfarm Employees (16-54 years of age): 118,602,000
- Percentage Of Working Age Americans Employed (Full or Part-Time): 56.10%
Here is what it looks like graphically:
Of course, here is the real problem. There are currently more than 93 million individuals that are simply no longer counted as part of the labor force.
You can see the clear surge in this group of individuals that began late in the Clinton years when the definition was changed to exclude all individuals unemployed longer than 52 weeks. This created an unintended consequence following the financial crisis as large chunks of the population have remained unemployed longer than 12-months as unemployment insurance was extended to 99 weeks.
However, while many economists still point to the financial crisis as the cause of the employment debate, the issue actually began at the turn of the century as technological innovation gained traction in the business environment.
Take a minute just to think about how technology has changed your current work environment. Many companies no longer employee receptionists as auto-attendents now direct phone calls. Today, an individual employee is able to produce the work of two or three individuals previously and because they are now "wired in" they are working even longer hours answering emails, researching and producing content when away from the office.
The NYT recently produced a video showing how technology has changed the farming landscape from one where "farm hands" were hired to plant and harvest fields to automated machines doing the bulk of the work.
While artificial intelligence and robotics have certainly increased productivity of the average worker, it has also reduced the need for employment in many areas.
Tim Knight recently pointed out an interesting fact in this regard.
"Take for example Briggs and Stratton headquartered in Milwaukee, WI. In 1980, they employed 20,000 workers in their factories making small engines. Today that number is down to 5000. And the reality is that they moved no jobs out of Milwaukee and are manufacturing more product than they did in 1980. And many of the 5000 now employed are skilled technicians that service the mechanized assembly operations.
The same is true in the automotive industry and pretty much every other manufacturing segment of the economy. And it is not just the factory floor. Computers have slimmed the size of office staffs, phone answering systems have replaced call receptionists and so on. Computers have not only trimmed workforces but eliminated entire manufacturing companies as their products became obsolete."
Of course, it is often suggested that the creation of robots will create more high-tech jobs for skilled professionals. That is probably true in the shorter-term until inevitably robots begin to manufacture robots.
Importantly, you cannot blame corporations, farmers, etc. from continuing to move towards higher efficiencies to lower costs and increase profit margins. The biggest expense for any business is labor, compliance with regulations surrounding labor (Sarbanes-Oxley,OSHA, EPA, etc.) and the costs of benefits (Healthcare, 401k plans, etc.). The more businesses can reduce physical labor, and legal and regulatory compliance costs, the greater the profit margin on each dollar earned becomes.
My good friend Charles Hugh-Smith of OfTwoMinds pointed to this exact problem in his post "Labor, Capital and Ideas in the Power Law Economy:"
"Rather than rehash the usual failed Keynesian Cargo Cult economics, the authors describe three powerful ideas that resonate very strongly with my own work:
1. Digital technologies (networked software, automation and robotics) are radically reducing the need for human labor and the leverage of traditional capital (land, fixed assets and cash) globally.
2. Premiums flow to whatever inputs are scarce. Labor and traditional capital are no longer scarce; what's scarce is innovative, practical ideas. Ideas (for new models, products, services, processes, etc.) are a third form of capital that will accrue most of the rewards.
3. This distribution of premiums/rewards follows a power law, i.e. the Pareto Distribution where the "vital few" with the 3rd type of capital (good ideas) reap most of the rewards.
This is, of course, a generalized simplification, and there are plenty of parts of the economy that still depend on labor and conventional capital. But the point here is that thanks to globalization and overcapacity, most inputs are no longer scarce, and so the premium (high wages and/or profit margins) that the owners of labor and capital can charge is trending down in every tradable sector."
The illusion of full employment that has glazed over the ocular cortexes of most economists who continue to hope that wages will be forced to rise supporting a continued economic recovery. However, as witnessed by the latest report on unit labor costs, after six years of economic recovery real hourly compensation remains in a decline. [Note: the spikes in compensation at the beginning of each year is due to annual year-end bonuses and dividend payouts by the bulk of partnerships that now dominate the corporate entity structures. These payouts and distributions are passed through as income directly to the underlying members/partners.]
The increasing use of technology to replace human capital is a trend that will not reverse anytime soon and will continue to proliferate areas where unskilled, repetitive labor can be automated. This is the risk that fast food workers take by lobbying for higher wages; an ordering kiosk can be quickly employed to take orders and deliver those to an automated production line. Or better yet, why not allow customers to simply place orders on the way to the restaurant through an "app." (There is a billion dollar idea for someone to develop.)
To quote Charles again:
"This means that the real winners of the future will not be the providers of cheap labor or the owners of ordinary capital, both of whom will be increasingly squeezed by automation. Fortune will instead favor a third group: those who can innovate and create new products, services, and business models."
The next time you go out take a moment to realize the impact of technology on everything you do. Also, notice how many individuals have the faces stuck into their phones being truly unproductive.
Imagine if Albert Einstein came back today and asked what the most incredible invention of this century was? The simple answer would be this small device we hold in our hands that contains all of the known information in the universe. Unfortuately, instead of elevating our society intellectually it has been reduced to sending pictures of cats and tweeting mean messages to people we don't even know.
Economists are going to have to soon come to the realization that the structure of the modern economy has permanently changed. Continued increases in technology will continue to suppress the need for labor and the competition for available jobs will depress wages. Going forward economists, politicians and Central Bankers are going to have to rethink the role of work, our place in it, and the long term effects on the economy.
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The Luddites were right!
Most people advocate full employment, I advocate full UNemployment!
The Abolition of Work by Bob Black
http://www.primitivism.com/abolition.htm
The post Jobs society does not require anyone to work, while every get's basic income!
To get a job nowadays either requires a skill or the ability to learn a skill. I know to many college grads who lack the reading or math skills needed but they do know how to protest whatever inequality is on the cool list this month.
POTUS has nothing to worry about; they'll never invent a robot that does absolutely nothing.
Though, he could possibly be replaced by a teleprompter...
A dildo with a grinder wheel so at least the wookie is happy.....
dupe city
And, if you are willing to buy a hamburger cooked and served from a kiosk, you deserve to eat a shit sandwiich
And, if you are willing to buy a hamburger cooked and served from a kiosk, you deserve to eat a shit sandwiich
Ahem....you are going to get a MUCH better burger from a robot, quicker, made to order and with ZERO chance of spit or snot, or shit being rubbed into it by some disgruntled teenager.
The robot will run 24/7. It will not be late to work. It will not ask for a raise or an increase in Minimum Wage. It will not join a union. It will not sport tattoos and a bad attitude.
What Redbox did to Blockbuster is coming to a burger flipping job near you !!
Learn C, C++, Python and JAVA coding. Learn mechanical engineering. Your robot overlords will need servicing. This is the new job opportunity of the future.
The amount of people that are going to be replaced can never find work in servicing robots. Otherwise it would not increase productivity. 1+1=?
We are just reaching the end of the compound interest ponzi and capitalist regime, which ultimately destroys itself, because it is built on exponential growth. Like cancer. Which destroys the host.
Try to not sprout complete self-contradicting nonsense:
Every successful automation, i.e. more effectiveness, allows for more growth with the same limited resources.
Steven Hawking is correct:
Technology Evolution is much faster than Human Evolution.
Only as long as there are calories available for consumption. Please, technology fails all the time asshat.
Rrright, that we exchanging us here is a clear sign of those continous technology failures.
Now please explain to us how it is possible that suddenly no calories available for consumption anymore.
The resources used per capita are twice as much as 20 years ago.
Who should buy the ever more products? Isn't chicken filet for snacking not already sick enough for you? Want a third or fourth TV so that your children fall asleep with the brainwashing machine? How deranged are you, that you want to continue on that path?
Keep continuing to mix up choice consumption with successful automation, and you can come to any conclusion that suits you!
But you cannot sexually harrass a robot (OK a few kinky Japanese might but...) so there is always the need for hot young female employees.....thins is a joke, I do not actually harrass or encourage or condone it...baby...
"But you cannot sexually harrass a robot (OK a few kinky Japanese might but...) so there is always the need for hot young female employees.....thins is a joke, I do not actually harrass or encourage or condone it...baby..."
AHEM !!!
http://www.dailymail.co.uk/sciencetech/article-2507186/Would-sex-ROBOT-J...
http://img.ibtimes.com/www/articles/20120420/331152_sex-robots-video-rox...
No, Its you that thinks he will get a bigger better burger or needs a future job. I raise the Damn beef ( I guess the cowdiddly name was'nt obvious enough for you) and I want a real person cooking mine. Beef I raise, have butchered and cook myself or someone I know. Enjoy your Corporate burger complete with pink slime and sawdust filler.
And remember to be patient when that Jack-in-the Box clown malfuntions and keeps asking you repeatedly if you would like a hot apple pie to go with your clown burger.
Whatever cowpie.....
http://momentummachines.com/
http://www.psfk.com/2012/11/burger-making-robot.html
http://singularityhub.com/2013/01/22/robot-serves-up-340-hamburgers-per-...
http://motherboard.vice.com/blog/meet-the-robot-that-makes-360-gourmet-b...
Yum yum robot burgers............EAt up
You types just don't get it, you can't.
That robot is doing the work of, let us guess, 5 workers.
That robot requires ONE WORKER to visit and maintain ONCE A WEEK.
That coding technician and Engineere is loading hamburger patties on his service calls.
He visits 6 robots a day, 6 days a week.
36 robots, one job.
Formerly 180 jobs.
Figured out the problem yet?
Go watch Hunger Games - Capital City is our future. 1,000,000 will have great awesome creative jobs that pay the 2014 equiv of 250kUSD a year and everyone else is working a coal mine with their bare hands.
SFO and Palo Alto are a preview.
Yes, the economy is so resilient that it required $5 trillion to prop it up from the fed, massive monetary easing globally, a debt to GDP ratio of over 100%, and constant jawboning and intervention. Resiliency defined.
>The next time you go out take a moment to realize the impact of technology on everything you do. Also, notice how many individuals have the faces stuck into their phones being truly unproductive.<
This is BS, and just as soon as I get off the phone...........
People can't pay attention long enough to be aware of their surroundings in a crowd.
Walking through Union Station, DC everyday makes me want to die. So many oblivious fucks everywhere.
The only reason we have had "the longest run of job creation in history" is because moar people are working part time jobs to survive. Sure technology plays a role, but don't leave out the impact of bad policy decisions forced upon the nation like Zerocare.
Yeah, my niece is working two part time jobs plus go to school in the evenings but she is at least trying her best. Most of her friends just whine about how unfair it all is.
Your niece must be a happy woman to be such a productive slave. Americans really have deserved this wonderful system.
I assume that must mean your a member of the grasshopper class who plans never to get ahead or achieve. My niece is paying her own way and when she's done and she'll be an RN making a good starting wage with raises guaranteed and no debt.
LOL,
She'd better not hold her breath. My wife gave a lecture last year(as she does every year on the same topic) and she learned that ONE... ONE nursing grad had a job at that point lined up. and she was going to work in DAddy's practice.
the rest of the class? NOTHING.
“In the short term, there are concerns that clever machines capable of undertaking tasks done by humans until now will swiftly destroy millions of jobs. In the longer term, the technology entrepreneur Elon Musk has warned that AI is 'our biggest existential threat'.”
http://failedevolution.blogspot.gr/2014/12/s-hawking-development-of-full...
Yes. We all know "Age of Ultron" is coming out and no one hip can resist commentary on the subject. It is the same for Bill Cosby who and female watchers of the movie "Gone Girl".
Let me know when we get flying cars (still 20 years out? just like 50 years ago?) and then I'll worry about AI.
Yes, I remember reading about them in grade school in the 60s. It was my favorite book.
1. Everyone who shits on food servers for wanting a living wage while acknowledging the FEDs damage of the last century is a fucking hypocrite. Those workers could have a living wage AND be more cost effective if we still had sound money.
2. Everyone who thinks people are to apathetic or to stupid to overthrow the oligarchy are wrong. Yes the sheep's are easily led. All it takes is a couple of charismatic leaders to get them to understand why things are shut. You think everyone who participated in the American or French Revolutions was a scholar. Of course they weren't. But it only took a few scholars to lead them to victory.
The ruling class ought to consider removing the boot from the throat of the proles. They might regret over reaching.
https://www.moneymetals.com/news/2014/12/03/new-signs-gold-and-silver-ar...
It only has started. Autonomous robots for example will make almost the whole employment in the transportation sector obsolete.
No. The the REAL problem is hidden by this article:
All the productivity gains cannot be earned by mankind, because of compound interest. Compound interest is the force behind exponential growth. Therefore although today a car manufacturing worker has double the productivity of one of the 1970s, because of automation, he is earning not twice as much, or only working half the time, but he is producing twice as many cars. And this is practized in every segment.
Compound interest destroys the society, the people and ultimately the planet.
There is no exponential growth in nature - except cancer. And that ends with the exitus of the host.
BINGO..........
end DEBT-MONEY
Very true!
But money as debt is only one component: an economy fully backed by gold can be built on compound interest: you just have to lend out the gold against interest.
Money as debt and (compound) interest is the core of the problem.
No and NO
the problem is the monetary system itself. When the medium of exchange is saved and lent (2 sides of the same coin) it destroys the value of the currency.
The solution is emerging. We call it freegold but most will just refer to it as 'our current system after the old one failed.'
http://fofoa.blogspot.com/2014/12/global-stagnation.html
...read that a few dozen books and put a few thousand hours into understanding our current system and you'll be al caught up.
Money printing has grossly misallocated capital; Byzantine regulations make it nearly impossible to start businesses or hire workers; the dying middle class is enserfed by superfeudal levels of taxation -- yet structural unemployment is *technology's* fault.
Go ahead, blame it on the robots. You got to blame it on something. Cause the robots don't mind, and the robots don't care...
Agreed. Parasitic corporations couldn't possibly have anything to do with it - or the population being trained like lab rats to scan and bag their own purchases at zero discount and to have fewer interactions so we don't talk about how bad things suck.
this is exactly correct. everything that i want to do as an aspiring entrepreneur is either illegal or prohibitively expensive. and it's not by accident.
A complete misreading of the situation.
People waste their time on the internet because they do not have the local purchasing power to live.
When the breakdown occurs you will find a dumb Mick clearing rocks from a field will be more productive then a gee wiz kid depending on a very long supply chain.
Yup.
"Continued increases in technology will continue to suppress the need for labor and the competition for available jobs will depress wages."
Not likely....at least not the, "continuing increases in technology part".
The need for labor will increase dramatically....but at slave "wages." As slavery will be the only way to meet future energy needs.
Why not have your smart T.V. place an order for you based on number of people sitting on your couch, food related conversations averaged out over the last hour, room temp, a short cross communication with the smart fridge, etc and have it delivered via drone. Nobody will even have to look up from their ishit or have a conversation......
How much does one tip a kiosk at the restaurant?
.0025 bitcoin to the ID for fonestar
We obsoleted some folks
Distributionists are also skeptical of full employment but for very different reasons.
The above talks of digital solutions crap
But a person living a atomic / electronic existence requires home delivery of products.
This is a extremely energy intensive method of distribution which means the energy is destroyed before it can be used.
This only favours those who benefit from the current concentration camp known as capitalism.
Capitalism is concentration.
Hell, yes, A Lunatic! I suppose you've read about the guy who's divorcing his wife because he caught her cheating via their smart tv in the bedroom. No matter that this guy was cheating all the time on her; guess she wasn't "smart" enough to turn that technology on her dirtbag spouse first. Abolish the Feral Reserve System and lynch all of the banksters! I know plenty of people over 50 who have 3 and 4 jobs to make ends meet. Gotta love this economic "recovery," huh?
The only sound industrial policy is a national dividend ( not a national income)
That at least makes a attempt at replacing the capital destroyed achieving industrial nirvana.
There will be a tipping point that is reached when all of a sudden a robot can do pretty much any physical and mental grunt work that a person can do. If one robot learns or is taught how to do one small task, instantly all other robots will know it through their shared brain in the cloud.
I think people will be surprised at how fast this happens. How soon it happens is tough to say but some are saying it will start within a few years.
You can't just teach a robot. You have to manufacture entirely new parts & designs to handle new tasks in the physical world.
So far no one has automatically re-engineering robots that learn, re-build their own programming & bodies, then go error-free to a new task.
Time to invest in automat Vending Machine?
https://www.google.com/search?biw=1024&bih=649&source=lnms&tbm=isch&sa=X...
A social creditor would ask why the Facebook roboten lack the purchasing to interact with their local community.
Total consumption represents the costs of distribution.
If consumption declines it is a result of something wrong with the distribution mechanism.
"This means that the real winners of the future will not be the providers of cheap labor or the owners of ordinary capital, both of whom will be increasingly squeezed by automation. Fortune will instead favor a third group: those who can innovate and create new products, services, and business models."
... UNTIL your innovative idea is copied by some sweatshop in China that also has the first two bases covered.
So, westeners will sit on rocks, chins perched on their fists, come up with brilliant innovations for a fleating bit of cashflow only to see those ideas instantly flow eastwards (along with Gold). YAY for the new normal!
We can see these dynamics quite clearly if we look at typical med countries with great agricultural bounties such as France and Italy.
At one time wine consumption was 3 4 or sometimes 5 times present levels.........
What happened ?
Extraction using 3 mechanisms.
Increased taxes , inflation and abuse by natural monopolies.
In the modern economy purchasing power is destroyed before it can be used.
The destruction is done by capital goods , typically cars.
Good old greed can be found at the foundation of the economy's problems.
Can't really agree here
I wouldn't trust a machine to put together a sandwich or burger for me as I order it, only a person.
I also see a lot of "exported jobs" not to machines but to cheaper slaves & part of that is FOREX manipulation. The real cost doesn't go down, only the fiat cost.
get rid of your computers and smart phones! disconnect from the matix before its too late.
embrace the religion of low tech!
Do the one and only thing you can do, stop making babies so that labor force will be reduce to help drive up wages!
Needless to say this will require everyone's full cooporation or else just one too many douche bag breeder will ruin our plan for wage recovery.
No, wages probably aren't going up. But don't worry about it, soon everything else will tank, and balance WILL be restored...
Sorry about those corporate profits, but shit happens.
What those who make such and similar statements overlook, is that ALL HUMANS ARE UNSKILLED LABOUR in comparison.
Lately across multiple websites, languages, nations and cultures have begun to see this on web pages:
"Stories were selected by machine..."
Bloggers, The Tylers, writers, coders, web page designers - all jobs that people think are SKILLED, won't be.
This is just the beginning of massive, global out-sourcing to machines, and humans won't have anything to do. Kids with degrees living in mom's den on their smartphone all day is just the beginning. They won't ever have a productive job, and once mom dies and the assets are gone, they won't have a standard of living to hold on to.
anxiously waiting for a robot that rehabs old houses